DAX 40, AUD/USD and copper prices recover from Thursday’s rout
Technical analysis of the DAX 40, AUD/USD and copper as they recover from Thursday’s sell-off.
Macro update
Oil retreats:
Prices declined as the US and its allies moved to increase supply and safeguard shipping through the Strait of Hormuz, with Brent crude oil down around 1 - 3% and West Texas Intermediate (WTI) crude oil lower by roughly 2%.
Supply response builds:
US officials indicated potential releases from strategic reserves and possible easing of sanctions on Iranian oil, while production in North Dakota is set to rise as wells come back online.
Geopolitics still dominant:
Despite Friday’s pullback, Brent remains up about 4% on the week following attacks on Gulf energy infrastructure, while WTI is on track for a weekly decline.
Central banks turn more hawkish:
Markets have shifted towards a tighter global policy outlook, with expectations for a Federal Reserve (Fed) rate cut this year fading and potential hikes from the Bank of England (BoE) and European Central Bank (ECB) being priced in.
Bond yields surge:
A global bond sell-off pushed short-dated yields sharply higher, with UK two-year gilt yields up around 88bps this month amid energy-driven inflation concerns.
Equities and FX mixed:
Wall Street closed lower and remains below key technical levels, while the US dollar weakened about 1% over the week as other central banks adopted a more hawkish stance.
DAX 40 sidelined
The DAX 40 is expected to recover from its 19 March 22,760 low but may struggle around its 19 March 23,180 high. If exceeded, the 13 March low at 23,293 may be reached.
Short-term outlook:
Bearish while below the 19 March 23,180 high.
Medium-term outlook:
Bearish while below the 18 March high at 23,957.
DAX 40 daily candlestick chart
AUD/USD bounces off support
AUD/USD has swiftly bounced off its January to March uptrend line at $0.7000 and is trading back within the middle of its past month sideways trading range.
A rise above this week's $0.7150 high is needed for the current March peak at $0.7187 to be back in the picture.
Short-term outlook:
Bullish while above the 19 March $0.7000 low, targeting the $0.7147 - $0.7158 area.
Medium-term outlook:
Bullish while above the early March $0.6945 low, eyeing the January 2023 peak at $0.7158.
AUD/USD daily candlestick chart
Copper price tries to regain lost ground
The price of copper is bouncing off Thursday's $5.2973 four-month low, having formed a 'hammer' on the daily candlestick chart. A daily chart close above Thursday's high at $5.5635 would confirm the bullish reversal chart pattern and put the $5.7000 - $5.8000 region back on the map.
Resistance may be encountered between the February-to-mid-March lows at $5.6280 - $5.6563.
Short-term outlook:
Neutral while holding above the 19 March $5.2973 low.
Medium-term outlook:
Neutral while trading above the 19 March $5.2973 low, failure there would turn the forecast bearish.
Copper daily candlestick chart
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